Economic Truth…Can you Handle it?

By now all of you should have received a massive raise as a result of the even more massive corporate tax cut. What’s that? Your raise was the same or possibly even less than last year? How can that be?! I specifically remember being promised, with straight faces nonetheless, by quite a few old, rich, white men in D.C. that giving corporations a tax cut the likes of which we’ve never seen would all but guarantee a hefty chunk of that extra cash would trickle down to employees. Didn’t Ronald Reagan himself say this is how our world works before he got Alzheimer’s? Or did he say that after? I can’t remember.      

Anyway, it doesn’t add up because I’ve been told all along that corporations and the 1% literally trip over their Ferragamos to share windfalls with the other 99%. And now you’re suggesting that all along I was being lied to? Psshhh.

A Brave New World

If you were one of the suckers who actually fell for this ridiculous and flagrant distortion of economic reality, I sympathize with you. Ok, I’m lying; I really don’t sympathize with you at all. In fact, if I’m to be completely honest, you kind of deserved it because this is where you should have been paying attention in your Econ 101 class, or at the very least, paying attention to the world around you for oh, I don’t know, the past several decades? The world has changed my friends and the first step to recovery and success for those of you who still don’t get it is acceptance and a willingness to adapt to the new rules.      

You should know that I’m not against leveling the playing field with the rest of the world in terms of taxes. I’m also not against someone making considerably more money than I do. I’ve always accepted the fact that there are just certain skills and traits that companies are looking for and willing to pay considerably more for. I get it. It’s capitalism as it was intended and for the most part, it’s worked pretty well for over 200 years.        

However, I do have some serious issues with the obnoxious levels to which this “premium” has gone. For example, the average CEOs pay from the early 1970s through 2017 has grown by 997% while the average worker’s pay grew by just 11%, both adjusted for inflation. Yes, you read that correctly: 997% vs 11%. Ouch.       How can companies and CEOs get by with such unapologetic, in your face greed? The answer is simple: because they can. With what’s surely to be another failed attempt at limiting this greed, there’s an SEC rule now in place that requires publicly traded companies to publish their CEO to average employee pay ratios. For the rule to have any impact though you have to make a very big assumption; that CEOs and board members give a shit what you think or have any shame whatsoever in giving themselves huge salaries and bonuses. They do not. That’s why the rule, for the most part, is completely useless.      

The abusers have defined in their own minds what, “fair share”, means and not surprisingly they feel they’re worth significantly more than you and I. Add to that the fact that they basically set their own pay while limiting yours and you can see how this got totally out of hand and why it’s not likely to change.


Swallowing the Bitter Pill      

Now for some nasty tasting medicine. With all of what I just said fresh in your mind, I want you to do something very important. Forget all of it. Or if you can’t completely forget it, accept it as the new reality at least for the short to midterm. Accept it because whether you like it or not, you won’t change it in the near future, and because you can’t change it you’re wasting valuable time and energy that could instead be used to strengthen your own game.      

In a world that’s become rigged in favor of the wealthy, through political contributions, access to those who write the laws so they can be written in their favor, and basically the freedom to write their own checks, you’re probably wondering what I’m talking about when I tell you to just “forget all of it.” But I’ll explain.      

I’m not saying the current system is right and just. It isn’t. It’s narrow, short term thinking by those benefiting the most. More importantly, I’m only referring to the financial greed that has become such a part of our economy and not the current level of hate we are witnessing right now by those in power. This is the far more dangerous piece and we all need to push back and let it be known that we aren’t ok with a racist, sexist, nationalist, protectionist country. Pushing fear and hate to the masses is a dangerous strategy and you only need to look in the not so distant past to see what awful and inhumane things can happen when small minded, hate filled leaders push the extremes. Don’t just forget and accept these things as the way they are. Push back and push back hard.


The New Game Plan      

Now that we’re clear on all of that, just because you aren’t likely to become a billionaire doesn’t mean you can’t succeed in this system. It’s unlikely anybody reading this article will ever become a billionaire but honestly, does it really matter? Owning multiple houses, yachts and private jets, while employing dozens of staff to manage them, sounds exhausting to me. No thanks. Quality over quantity I’ve always said and I truly believe that’s what makes me the most happy. In the first part of this article I pointed out that CEO pay has increased 997% over the past several decades compared to a paltry 11% for everybody else. As ridiculous and eye opening as this comparison is, it does make another rather large assumption: That you can only get ahead financially through raises. The average pay increase for at least the last 15 years has probably been around 2% and this is unlikely to change anytime soon. Factor in health insurance increases pushed down to employees and the elimination of corporate pensions and the average net increase each year has probably been negative for most employees.      

But very few people in recent times have achieved financial independence and success by working the same job and relying solely on annual increases to get ahead. To make any meaningful progress you have to move up, either through promotions or by moving to another employer who can provide you with more opportunities and higher pay. Corporate loyalty died a long, long time ago and corporations only have themselves to blame. Employees finally realized they were no longer viewed as an asset but a liability that could be disposed of at any time. Loyalty has to work both ways or it doesn’t work at all and this is a clear example.


Create Your Own Opportunities      

To create your own opportunities you have to continually focus on and invest in yourself. If the people at the top are being incredibly selfish, you have to do the same. In other words, always put you and your family first. You’ve heard it all before but it’s worth repeating. Take on new responsibilities at work, feed your brain either in class or by reading…a lot, ask questions and increase your skill set and raise your game all at once. These are the low hanging fruit and no matter what position you’re in, whether a cashier or a financial manager, you can work towards the next step.       

Even before you pick the low hanging fruit though you need to get your head in the right place. I’ve talked about this before but a lot of this comes down to an understanding of the facts and your own mindset.      

First realize that in most cases nobody is “taking” your job. Even so, we do undeniably live in a global economy and you have to accept that you’re going to have to compete harder than your parents did for good jobs. Don’t sit around complaining about it and berating the guy from India, China, or please spare me, Mexico. I really believe a lot of people want the playing field artificially tilted in their favor and one of the ways they propose doing this is by eliminating the competition. But realize nobody ever got better by limiting the competition or by favoritism. You get better and increase your worth by competing with the best the world has to offer.
Capitalism      

Another point I want to make is that this in itself is how capitalism is supposed to work. If you look at the United States and the jobs that have been shifted overseas, they have typically been low level, low skill positions. There are literally millions of people willing to enter data all day or answer phones for a fraction of what you and I would expect to be paid for the same work. That’s because employees in India, Vietnam, or any number of other countries, can have a great life on a few hundred dollars a month. We are no longer able to do this  because our cost of living and what we’ve come to expect in terms of lifestyle require a much higher salary. And that’s not necessarily a bad thing.      

What ultimately happens is we retain and grow the higher skill, higher pay positions like programmers, database administrators, investment bankers, etc. These are the jobs we want because they can increase our standard of living just like data entry positions can increase the standard of living in a much less developed country.


Looking Forward      

Ask your parents or if they’re still alive, your grandparents, about some of the challenges they faced and you’ll quickly see that things were rarely smooth, predictable and without risk. The 40s brought WWII, the 60s saw a country torn apart by Vietnam, and in the 70s we thought the world was ending with oil embargos, stagflation, and the impeachment of a president. Since then we’ve been through big hair, parachute pants, recessions, market meltdowns, terrorist attacks and everything in between. But we’re still here and in many ways we’re better off than before.      

Look around and notice all the people living a great life with far less than a billion dollar net worth. Even within my own small circle of friends and family I have several great examples of people who faced some bad times, personally and professionally, and still landed on their feet. Find your own examples and try to learn from them and use those examples as a road map and then focus on what kind of life you want to live and get to it.


Rick

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